Obama Faces Major Foreign Policy Test in Showdown with Putin

Even without the initiation of economic sanctions, Russia is already feeling the pain. On Monday, the Moscow stock market suffered one of its biggest one-day declines in recent years and the ruble plunged sharply in reaction to the Kremlin’s maneuver. Moreover, companies on the Moscow stock exchange have lost billions in market value. And the central bank raised its main interest rate from 5.5% to 7% – the largest hike since financial crisis that hit Russia in 1998.

The Moscow stock market was not alone in taking a battering though. US stocks and other global equities took a nosedive on Monday due to jittery investors. The S&P 500 Index fell 0.7 % to 1,845.73, the biggest slide in a month, wiping out a gain for the year after the index finished last week at a record. The Dow Jones Industrial Average dropped 153.68 points, or 0.9%, to 16,168.03. In Europe, Germany’s DAX was walloped, plummeting 3.1 % – one of its biggest daily declines in eight months – while the continent’s other major stock markets dipped about 2%. The yen, U.S. Treasuries and gold rose as investors sought safe havens.

Energy prices are also expected to rise in Europe since Russia supplies 30% of the continent’s natural gas and the Trans-Siberian Pipeline – one of its main export pipelines, runs through the Ukraine, according to TheGuardian.com.

In face of such economic and financial volatility, the administration continues its series of diplomatic efforts. According to White House officials, Vice President Biden talked with Ukrainian Prime Minister Arseniy Yatsenyuk on Monday afternoon to review economic reforms as well as spoke with Estonian President Toomas Ilves as a means of gaining regional support.

Secretary of State John Kerry, Tuesday, will travel to Kiev to offer economic aid to the Ukrainians, the president said, as a means of “stabilizing the economy even in the midst of this crisis” as well as communicate to Moscow that “if they continue on the current trajectory that they’re on, that we are examining a whole series of steps – economic, diplomatic – that will isolate Russia and will have a negative impact on Russia’s economy and its status in the world.”

Obama further stated: “The question for Mr. Putin, who I spoke to directly, and the question for the Russian government generally is if, in fact, their concern is that the rights of all Ukrainians are respected, if, in fact, their primary concern, as they’ve stated, is that Russian speakers and Russian nationals are not in any way harmed or abused or discriminated against, then we should be able to set up international monitors and an international effort that mediates between various parties, that is able to broker a deal that is satisfactory to the Ukrainian people…not to the United States, not to Russia, but to the Ukrainian people…and we should be able to deescalate the situation.”

The president plans to not waver from his stance as he continues to promote his unified alliance: “I think the strong condemnation that its received from countries around the world indicates the degree to which Russia is on the wrong side of history on this.”